Foreign investors buck the trend in GCC markets despite headwinds

Foreign investors still bullish on GCC stocks: Foreign investors continued buying into GCC stock markets in 1Q, with net inflows totaling USD 2.8 bn — just a bit lower than the USD 3 bn they poured into regional equities during 1Q 2024, according to Kamco Invest’s quarterly report (pdf).

Foreigners stepped in where locals stepped back: With local investors offloading shares, foreigners were quick to step in and pick up the slack — taking advantage of cheaper valuations and turning what could’ve been a weak quarter into a solid one for cross-border inflows.

The bigger picture had its fair share of headwinds: Most regional stock markets didn’t perform well — six out of seven closed the quarter in the red. Investor sentiment took a hit due to global worries, especially over US trade tensions and signs of a potential economic slowdown, Kamco said, adding that the usual selling pressure around Eid also added to the drag.

March saw sentiment shifting: Things were looking good at the start of the year, with steady foreign buying in both January and February. But that momentum didn’t carry through the quarter — March saw a noticeable slowdown, with some investors switching to net selling.

Abu Dhabi led the pack, pulling in USD 2.3 bn in foreign capital, followed by Dubai which logged USD 343 mn in net inflows. Meanwhile, Saudi Arabia saw smaller amounts of net buying at USD 252.3 mn, with foreigners now allowed to invest in listed firms that hold property in Makkah and Madinah.

On the flip side, foreign investors were net sellers in both Qatar (USD 421 mn in outflows) and Oman (USD 459.2 mn out).

Saudi led the stock performance scoreboard: Saudi companies accounted for 5 of the top 10 Gulf stocks in terms of trading value. Al Rajhi Bank topped the list with USD 6.3 bn, dethroning Aramco which stock fell to third place at USD 4.4 bn.

MARKETS THIS MORNING-

Asian markets are mixed this morning, with Japan’s Nikkei inching up 1.1% and Shanghai Composite up 0.3%, while Hong Kong’s Hang Seng is down 0.7%. Meanwhile, Wall Street futures are collectively in the red, indicating minor losses on market open.

THE CLOSING BELL-

The DFM rose 1.4% yesterday on turnover of AED 654 mn. The index is up 0.9% YTD.

In the green: Al Mazaya Holding (+14.6%), United Foods (+8.3%) and Orascom Construction (+7.8%).

In the red: National General Ins. (-9.9%), International Financial Advisors (-8.2%) and Ithmaar Holding (-2.9%).

Over on the ADX, the index rose 0.7% on turnover of AED 1.3 bn. Meanwhile, Nasdaq Dubai was up 1%.